SaaS growth pathways have come a long way over the years. First, we had sales-led growth, then, marketing-led growth, and today many are at product-led growth. Product-led growth is when SaaS companies build their businesses by relying on their product to do the heavy lifting.
Product-led growth is notoriously more scalable than sales- or marketing-led growth, and enables businesses to channel more efforts and priorities into the growth and maintenance of their product—which is what your customers will be using every day—rather than building extravagant marketing flows and sales cycles, which only serve to acquire customers.
By shifting to product-led growth, you shift into focusing on retaining customers first, which in turn, supports your acquisition efforts.
Yet, what should a product-led growth plan actually look like? Buckle up, in this article we’re exploring product-led planning, product-led OKRs, essential PLG principles, and the build of a successful PLG strategy.
Product-led growth is a good idea for most SaaS businesses with limited resources.
There are five key principles to understand when building a product-led plan.
A strong product-led growth plan starts with in-app customer research and ends with a North Star metric.
There are four types of PLG funnels you can use: bottom-up, top-down, self-serve, and assisted funnels.
Is PLG the right approach for your product? #
If your product is B2B SaaS, then the short answer is yes.
Now, depending on where you’re at in terms of going to market: product-market fit, brand recognition, industry signal, MRR, and more, will determine how you partner your product-led, go-to-market strategy with other SaaS growth strategies.
At the same time, it will depend on your funding, budget, and resources. Perhaps you’ve got funding that you have to allocate towards marketing and sales—and investors are pushing that you use your quarterly budget or it’ll be taken from you.
However, if you’re on a limited budget, then switching to a product-led growth strategy can be a smart move to ensure you’re staying customer-centric, building a product people love, and still meeting acquisition targets.
With that information on the table, let’s explore some key PLG principles you’ll need to wrap your head around in order to successfully go to market with this strategy—regardless of your budget!
5 Key PLG principles to understand #
There are many principles to PLG, but here are the top five you need to know.
1. Try before you buy #
Or, more commonly referred to in SaaS as a free trial. This PLG principle is key to getting your product into the hands of keen users, and it’s one we use here at Chameleon!
Providing you’ve got a solid in-app user experience, you should have no problem converting your free trial users at the end of their free trial period.
Most SaaS run a 2-week to 1-month free trial period. This should be enough time for users to discover their ‘Aha! Moment”—coming up next—and enough time for them to embed your tool into their day-to-day tech stack.
2. “Aha!” moment(s) #
Otherwise known as Eureka moments, these are those precious times you get your user to realize the product value. Ideally, you’ll want your user to cry “Eureka!” and throw a fist in the air. Failing that, you’ll want them to mutter “Aha” as they realize the possibilities that can be achieved with your product, how it can aid them in their job-to-be-done, and how it can ultimately make their life easier.
3. Self-serve distribution: onboarding, retention, and expansion #
Your product is smart, it does its job well. However, can it be smarter? Can it go above its job to serve every aspect of its own distribution? No, this is not an episode of Black Mirror, nor the latest version of Chat GPT, this is product-led onboarding, retention, and expansion efforts that are entirely automated.
This principle ensures your product runs a smooth, self-serve onboarding flow that minimizes customer success and support team tickets.
It ensures your product triggers retention tactics when users are demonstrating signs of churning.
It promotes and provides champion users with resources to help them grow your product user base for you, and incentivises their efforts.
4. Activation milestones #
User activation milestones are well-worth identifying, tracking, and celebrating for your users. Activation milestones are an in-app event that a user triggers which tells you they’re on their way to fully adopting your product into their tech stack—boosting those precious activation rates.
When you prioritize these milestones in your PLG strategy, you’re able to identify what actions users typically take before they become a paying user and which actions they take before they typically churn.
Once you understand this, you can automate triggered events to promote or push an in-app sale or upgrade. Or, trigger an event to re-engage users at risk of churning.
5. Frictionless product experience #
Of course, one of the core principles to product-led growth is a frictionless experience, right? Wrong. This heading is fake news—we apologize. But, a little friction actually goes a long way, especially when it comes to onboarding new users.
Research shows that if you add a pinch of friction to your onboarding experience, it can actually add towards your onboarding completion rates, product engagement rates, and overall retention.
Why? When you add some friction to your onboarding experience, users feel like they’ve worked towards and achieved something when they complete it. This makes them want to see it as a success as they’ve already invested time and effort into it.
A good example of this are product onboarding flows that require the user to click and navigate their way through the onboarding—rather than watching a Youtube video.
At the same time, learning by doing is notoriously more effective than learning by watching.
🦎 Chameleon top tip: Tooltips are the perfect complement to a self-serve onboarding flow that enables the user to explore and learn the product with total autonomy while remaining productive and on track to activation.
That’s our PLG principles on paper screen. Let’s get to creating a product-led growth plan you can rely on, all-year-around.
How to create a product-led growth plan #
There are five steps to creating a stellar product-led growth plan. Follow these steps, and you’ll be on to a winner.
1. Start with customer research #
It all starts with customer research. Now, I know you’ll likely be rolling your eyes, muttering “tell me something new.” But, let’s get you muttering “Aha!”
Customer research to define a product-led growth strategy needs to start in your app and with product analytics. It should be a combination of behavior-based action tracking, quick-fire pulse checks, heat/click maps, and open-ended qualitative questions.
Your market research should be helping you to define customers’ in-app pathways to success, as well as those pathways to the exit. Once you’ve identified both—for multiple personas—you’ll need to go a level deeper with closed and open-ended questions to understand the why behind the what.
In doing so, your customer data will help to combat the actions you don’t want, build on the actions you do, and replicate quicker pathways to product adoption in the future.
🦎 Chameleon top tip: if you’re looking for product-led resources to help with this, bookmark this article.
2. Define your PLG go-to-market model #
With your customer research in-hand (or, on screen) you’ll want to define the PLG growth model that’s a best fit. This step should not be predetermined before you’ve done your customer research. Understandably, you may have limited resources and think you’re not in a position to build out a freemium version of your product, or that you don’t have the capacity to build out an interactive onboarding flow, but try to stay open-minded to what your research shows.
If your customers highlight that they’re currently struggling with your onboarding process, or their missing Eureka-centric features and churning because of that, then perhaps there’s no time like the present to consider and flesh out a PLG GTM strategy that you’d previously written off as infeasible.
🦎 Chameleon top tip: Psst! Chameleon can help alot with the new customer onboarding and in-app guidance—and it doesn’t mean you’ll need to build out your dev team to get there!
3. Set clear goals with product-led OKRs #
With change on the horizon, and perhaps a few big shifts in team priorities, it’s a wise idea to do some goal-setting and map your product-led OKRs for your product management team. These OKRs will help keep your product team aligned, focused, and committed to a shared strategy. They’re also great for promoting cross-team collaboration.
So, with product-led growth in mind, what does success look like for your team? A few examples of product-led growth OKRs could be:
Revenue focused: increase MRR
Retention focused: increase ACV & CLTV, decrease churn
Adoption focused: drive adoption rates, increase user onboarding flow completions
Customer experience & user success focussed: increase NPS, decrease support tickets, increase customer ratings
Acquisition focused: create XX pieces of acquisition collateral for sales / marketing, increase no. of referrals.
Of course, you don’t need to set up OKRs for everything. Your OKRs will depend on your go-to-market model, which will depend on your customer research. One cannot exist, and will not be successful without, the other.
4. Choose your PLG funnel #
The age-old question in SaaS: the funnel or the flywheel. Well, we say “age-old”—SaaS moves fast and a few years can often feel like a few decades. Nightmares of pirates crying AARRR, RARRA, may be haunting you when we whisper “funnel.” To keep this blog on track, we’ll only focus on the different types of PLG funnels you can consider to win more users.
First up, let’s take a look at how the PLG funnel varies from the traditional funnel:
Next, let’s explore some of the potential funnel types you can consider for your fancy new growth model. Really, there are four types of funnels you’ll want to consider.
Self-serve funnel: the crème de la crème of funnels, and one that’s top of minds for many product managers when they think of transforming to product-led growth. It’s an entirely independent and fully-automated funnel in which the user needs zero human interaction.
However, this doesn’t work for every SaaS and customer type. And, that’s okay, you’ve got more options!
Top-down funnel: just because you have a hands-on, high-touch, approach to your user acquisition funnel, doesn’t mean you’re not product-led. If you’re dealing with exceptionally pricey contracts, or extremely technical setups, then sometimes human guidance and account managers are what users want and expect.
Bottom-up funnel: this type of PLG funnel sees your sales team only working on current accounts in order to stop them from churning, or upsell products and features. It means your product is working independently for acquisition, while you’re relying on human touch for retention and expansion.
Assisted funnel: a low-touch approach to product-led growth. Sales and customer support teams are merely there to guide new users and keep them coming back for more. A lot of this process can be automated, but your user will still have a friendly face they can call on.
These funnels mostly depend on your resources and how they line up with your ACV. If you’re a high-ticket product, or exceptionally technical, then you may want to consider a high-touch approach. However, if your product is plug-and-play, and relatively low cost, then a self-serve funnel may be more viable for your team.
5. Identify your North Star metric #
Oh, oh, oh. Now, this is a big one—the hint’s in the name. Your North Star metric is something that ties every step we’ve just discussed together—no surprises there! It’s the core metric that rounds up all of your OKR and product team goals, and lets company-wide stakeholders know if your team is putting in the work or not.
Your North Star metric signals product growth, customer acquisition efforts, product engagement, or overall improved CX.
It should be the one item that dictates whether your product is doing what it’s supposed to for customers, and it is often a core signal that a user has adopted your product.
For example, Slack’s North Star metric may be for new users to send 50 messages in one week.
Or, Loom’s PLG metrics may be that a user records ten videos in two weeks, and watches five.
Or, perhaps it’s something less specific and more holistic. For example, perhaps increasing your NPS score or CAC will be a sure-fire signal that your team is on the right track, or increasing your product-qualified leads will signal your actions are paying off.
You only need one North Star metric, to help identify and understand what product-led success looks like. But, there’s no limit to the number of micro-goals and OKRs that signal you’re on your way North.
Closing out product-led planning #
That’s a wrap on your product-led plan to set you off on your pathway to better product-led success. We hope you found this article useful and are able to walk away with a few holistic notes to consider as your shift into this highly profitable and scalable strategy.
Remember, it’s easy to jump straight to a North Star metric, or pick a PLG model that fits where your team is at right now. But, try to follow our steps in order of appearance, be open to change, and adapt to the demands of your customers—they may surprise you.